How to Start a Bank

The banking industry produces some of the most lucrative profit margins around. If you are interested in starting your own bank then you need to be prepared for the fund-raising, organizing and form filing required to set one up. These steps will help make the process easier.

Instructions

Difficulty: Challenging

Things You’ll Need:

• Business plan
• Banking and/or business management experience
• $6 to $10 million
• Charter bank application package

1. Evaluate how practical it is for you to start a bank. Look at your business experience. You will need to have business management skills, financial management skills and fund-raising skills.
2. Get to know your market. Before you start a bank you need to find a hole in your current market. After all people are not going to come to a start up bank if they can't offer the customer something unique. If your local market is already saturated with banks consider moving your bank to an outlying area that is underserved by financial institutions, or consider starting an online bank.
3. Recruit professionals to head the board of your bank. Look for people who you can work well with, for people who have banking skills and experience and for people who have business management skills and experience.
4. Research the requirements your state has for starting a bank. You can find this information at your state's Department of Financial Institutions.
5. Create a plan for raising the required capital funds for your bank. Search for investors, grant programs and ways to earn money to back your bank's start up. Expect to be required to raise millions of dollars for your bank's start up. California, for example, requires charter banks to have between $6 million and $10 million dollars in capital funds before their doors open.
6. Download and fill out the required paperwork for starting a bank. These forms can be found online at your state's Department of Financial Institutions' website. This application packet will include a general information sheet, several questionnaires, financial reporting sheets and eligibility checklists. You will also be required to complete supplemental documentation to back up your request to start a bank. You may need to put together a proposal for your bank and you may also need to create a business plan.
7. Wait for approval. This can take between several weeks and several months.
8. Implement your business plan after getting approved by your state's Department of Financial Institutions. Start your fundraising, look for a building, acquire insurance and bonding, hire employees and develop a marketing campaign.